Capital goods for input tax credit: loader and tipper used in an integrated mining and crushing process qualified under VAT law.

Loader and tipper used only within the mining area to move boulders to the crushing plant and load them for crushing were treated as capital goods eligible for input tax credit under the U.P. VAT Act. The Court held that the statutory definition of capital goods covers machinery and equipment used to lift or move goods within the relevant premises, and the exclusion for vehicles transporting goods or passengers cannot be stretched to cover equipment forming an integral part of an interdependent mining and crushing process. The mining and crushing activity was found to be one integrated operation, so the assessee was entitled to input tax credit.

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Issues: Whether loader and tipper used captively within the mining area for shifting boulders to the crushing plant and loading them on the hopper are capital goods eligible for input tax credit under the U.P. VAT Act.

Analysis: The statutory definition of capital goods includes machinery, loader and equipment for lifting or moving goods within factory premises, while the exclusion for vehicles used for transporting goods or passengers cannot be read so broadly as to exclude equipment used as an integral part of an interdependent manufacturing process. The record showed that the loader and tipper were used only within the mining area for movement of boulders to the crushing plant and for loading them for crushing, and that the mining and crushing operations formed one integrated process. The Court distinguished the decision dealing with motor vehicles under the Motor Vehicles Act, since the present issue was not levy of tax on vehicles but eligibility of input tax credit on capital goods under the VAT law.

Conclusion: Loader and tipper, when captively used as part of the integrated mining and crushing operation within the mining area, fall within the ambit of capital goods and the assessee is entitled to input tax credit under section 13(1)(b).

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